Cambridge IGCSE and O Level EconomicsChapter 1:The nature of theeconomic problemSuggested answers to individual and group activitiesGroup activities1 All three items are scarce.In each case,people want more than what is currently being produced.More people want to study at university than there are places available.Most of us would like toholiday abroad and those of us fortunate enough to do so would like to undertake more trips.Also there are not enough resources to provide good quality healthcare quickly,to everyone whorequires it.2 a freegoodb economic goodc economic goodd economic goode economic goodEconomic resources are used to produce b-e.Suggested answers to multiple choice questions andfour-part questionMultiple choice questionsScarcity arises because wants are greater than the resources that can be used to produce them.Workers tend to produce more each year,as they become more experienced and work withbetter machinery.Machines wear out with time but they are usually replaced by more efficientones and are often added to.There is no limit to people's wants.At any one time,there are only so many resources while there is no limit to our wants.Over time,resources can change.They may increase due to,for instance,a rise in the number of workersresulting from a rise in world population.They will,however,not become sufficient to meet ourwants,as wants will continue to increase and outstrip resources.World population is likely to rise for some time to come.Prices are also likely to increase in thefuture but such a change will reflect changes in demand and supply and will not be a cause ofscarcity.3DWind coming in from the sea does not take resources to produce it.All the other items mentionedhave to be produced and,in each case,the production involves an opportunity cost.Cambridge University Press 2018Cambridge IGCSE and O Level EconomicsFour-part question1 a The economic problem is that we cannot have everything we want.This shortage arisesbecause while there are unlimited wants,there are finite resourcesb A car is an economic good as it takes resources to produce it.Among the resources that areused to produce cars are,for example,machines and workers.The amount of cars produceddepends on the quantity and quality of resources that are used.These resources could beused to produce other goods and services.2Cambridge University Press 2018Cambridge IGCSE and O Level EconomicsChapter 2:Factors of productionSuggested answers to individual and group activitiesGroup activities1 a consumer goodb a consumer or capital good dependingon who uses itc a consumer goodd a capital goode a capital goodf a capital good2 For example:photocopiers,computers,desks,filing cabinets3 a The facilities students use both at home and in schools and universities have been improvedby advances in technology.They have more access to information and more tools via theinternet.They can also keep in contact with fellow students and teachers through socialmedia.Their teachers may also make use of,for example,interactive white boards.b Advances in technology have improved medical equipment,helped to develop newmedication and enabled more complex operations to be carried out.For example,lasersurgery is now undertaken to improve some people's eyesight and there are multiple organtransplants.c Food production has increased as a result of more advanced machinery and improved cropsFor example,some farmers are now using viners,which are special harvesting machines thatsuck up peas and remove them from their pods.Crops are being developed that are moreresistant to diseases and have a higher nutritional content.4 a i Suchi Mukherjie.Cambridge University (Economics and Maths);London School ofEconomics (Finance and Economics).ii Lui Chuanzhi.Xidian University (Engineering).iii Ben Murray-Bruce.University of South Carolina(Marketing).iv Zafar Khan.California Institute of Technology(Electronical and Electronics Engineering).b For example:Richard Branson (Virgin).Individual activities1 Among the forms of land used by a paper mill,are the land on which the mill is built and thewater and wood used in the process of making paper.2 a capitalb capitalc land-if it is a naturally formed lake but capital,if it is man-maded laboure enterprise3 a and b would raise labour productivity.Improved education and training would make workersmore skilful and hence capable of producing a higher output.Better equipment should alsoenable each worker to produce more.On the other hand,c would probably cause a fall in outputper worker.Worse working conditions would reduce workers'motivation and may make it moredifficult for them to carry out their tasks.Cambridge University Press 2018